Abstract

http://ssrn.com/abstract=2267414
 


 



Disclosing Corporate Disclosure Policies


Victoria L. Schwartz


University of Chicago - Law School; Pepperdine University School of Law

May 20, 2013

Florida State University Law Review, Vol. 40, p. 2, 2013

Abstract:     
Between Steve Jobs’ diagnosis of pancreatic cancer in 2003 and his death in 2011, Apple struggled to respect the privacy of its CEO while disclosing relevant information to its shareholders. The existing rules that govern corporate disclosure were of little help. They offer no mechanism for taking into account privacy considerations; nor do they provide any clear guidance regarding whether, when, and under what circumstances a corporation must disclose personal information about its executives. Existing privacy laws also fail to comprehensively address this problem. This legal void has created widespread uncertainty for executives, corporations, and shareholders. Scholars have also struggled to identify solutions that appropriately account for both privacy and disclosure. Their attempts have been hindered by the difficulty of estimating the respective values of disclosure to investors and of privacy to executives, especially to the extent that the value of privacy varies widely across individuals and depends on the type of personal information.

This Article offers one solution for accounting for this privacy-disclosure problem. First, corporations and executives should contract for a disclosure policy that takes into consideration the individual executive’s privacy preferences. The corporation should then be required to disclose the contracted-for disclosure policy to its shareholders. The use of a contractual menu approach would allow for the possibility of executives’ heterogeneous privacy preferences, while minimizing transaction and other costs of traditional default rules. At the same time, disclosure of the policy allows shareholders to indirectly exert influence on the corporation’s negotiations. In addition, the creation and disclosure of the disclosure policy increases certainty for all the parties involved.

Number of Pages in PDF File: 49

Keywords: privacy, disclosure, corporations, executives, securities regulation, menu contracts

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Date posted: May 20, 2013  

Suggested Citation

Schwartz, Victoria L., Disclosing Corporate Disclosure Policies (May 20, 2013). Florida State University Law Review, Vol. 40, p. 2, 2013. Available at SSRN: http://ssrn.com/abstract=2267414

Contact Information

Victoria Schwartz (Contact Author)
University of Chicago - Law School ( email )
1111 E. 60th St.
Chicago, IL 60637
United States
Pepperdine University School of Law ( email )
24255 Pacific Coast Highway
Malibu, CA 90263
United States
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